Mumbai, July 20: Gold in India extended losses for a second day to trade near its two-month low on Tuesday, spurring physical buying as traders braced for a second round of festivals from August, but a weak rupee weighed on sentiment.
“This is the last week of July before festivals in August, so physical traders are taking every opportunity to enter,” said Mr Pinakin Vyas, assistant vice-president, treasury, with IndusInd Bank, a gold importer.
Gold futures on the Multi Commodity Exchange (MCX) was trading 0.16 per cent lower at Rs 18,228 on Tuesday afternoon, after hitting a low of Rs 18,210, nearing the level last seen on May 25. “I priced-in for a sizeable quantity of gold from Monday evening below $1,190 levels,” said Mr Vyas.
“The rupee is not giving too much comfort to the market,” said a dealer with a state-run, bullion-dealing bank.
The rupee fell to its lowest level in a month and half on Tuesday, weighed down by defence-related import payments and demand for dollars from some companies.
A weaker rupee makes the dollar-quoted asset expensive.
India, which accounts for more than 20 per cent of global demand, will celebrate Raksha Bandhan on August 24, and Janmasthami and Ganesh Chaturthi in September.
The world’s largest consumer of bullion may imp-ort 500-550 tonnes of gold in 2010, up from 480-490 tonnes a year earlier, the head of a trade body said on Thursday.